Rising costs and pressure on rates

24 January 2022

Recently the blog carried a story about a tool hirer which has successfully raised its equipment rates for 2022 to reflect rising costs. However, others I’m speaking to are finding it difficult. Indeed, it’s the perennial industry challenge.

One hirer whose business offers a wide range of tools and plant tells me: “We’re certainly busy. We’ve been buying more equipment like minis and compact telehandlers that have increased in price, but it’s really hard to get hire rates up.

“We’re able to get a  better rate with new customers and some smaller contractors, but our bread-and-butter large-scale clients, who may have around 50 machines from us on a site at any given time, just don’t want to know. 

“If anything, they want to pay less. A lot of contractors are still struggling with rising material costs. And of course, they’ll be paying more for using white diesel when the red diesel fuel rebate is removed for construction users in April. It’s going to be interesting to say the least. 

“And when you think about large-scale machinery users like quarries and asphalt plants, using heavy equipment like crushers burns through considerable amounts of diesel. Their additional costs will be considerable.” 

Also, eco-friendly and cost-effective heavy machinery alternatives powered by batteries simply aren’t commercially available at the moment given the present state of the technology. The battery for a 20-tonne excavator would weigh around 8 tonnes and be the size of a room. 

However, the hirer remains confident, adding that “It’s difficult at the moment but we’re able to overcome most things.” 

In fact, the company has found that an unexpected quirk of market forces is helping to counterbalance its costs on new machinery. More on that in a future post… 

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